Marzan Company uses LIFO and a perpetual inventory system for its leading product, Z. Given the historical cost of product Z is $22, the selling price of product Z is $25, costs to sell product Z are $3, the replacement cost for product Z is $21, and the normal profit margin is 40% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method? $18 O $20 $21 $22

Marzan Company uses LIFO and a perpetual inventory system for its leading product, Z. Given the historical cost of product Z is $22, the selling price of product Z is $25, costs to sell product Z are $3, the replacement cost for product Z is $21, and the normal profit margin is 40% of sales price, what is the amount that should be used to value the inventory under the lower-of-cost-or-market method? $18 O $20 $21 $22

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company's normal selling price for its product is $26 per unit. However, due to market competition, the selling price has fallen to $21 per unit. This company's current FIFO inventory consists of 260 units purchased at $22 per unit. Net realizable value has fallen to $19 per unit. Calculate the value of this company's inventory at the lower of cost or market. Multiple Choice $4,890. $5,720. $5,040. $5,460. $4.940.
Black Corporation uses the LIFO cost flow assumption. Each unit of its inventory has a net realizable value of $300, a normal profit margin of $35, and a current replacement cost of $250. Determine the amount per unit that should be used as the market value to apply the lower of cost or market rule to determine Black’s ending inventory.
Valuing Inventory at Lower-of-Cost-or-Market Gard Inc. has compiled the following information related to its five products. Costs of disposal are estimated to be 10% of selling price, and gross profit is estimated to be 25% of the selling price. Determine the value of inventory applying the lower-of-cost-or-market rule to each individual inventory item. Note: Round each amount to the nearest dollar. #1 #2 #3 #4 #5 Estimated selling price $66 $76 $82 $100 $130 Original cost (LIFO) 45 48 60 63 90 Replacement cost 50 70 49 66 83 Inventory at the lower-of-cost-or-market $ (10) x $ (11) x $ (12) x $ (25) х $ (20) x
A-2
Information pertaining to the inventory of Palette Company follows. LIFO Selling Replacement Cost Price Cost Category: Supreme Item A $5,600 $6,400 $4,800 Item B 7,200 7,200 7,680 Item C 17,600 17,600 16,800 Category: Classic Item X 28,800 28,800 30,400 Item Y 35,200 42,400 41,600 Item Z 56,000 48,000 52,800 The company has a normal profit margin of 20% of selling price and has no additional costs to complete or sell the items. What is the lower-of-cost-or-market value of the company's inventory applying the rule to (a) each individual item and (b) to each inventory category? Select one: a. Inventory item: $147,200; Inventory Category: $147,200 b. Inventory item: $150,400; Inventory Category: $150,400 c. Inventory item: $143,520; Inventory Category: $150,400 d. Inventory item: $141,120; Inventory Category: $147,520
Jenks Company developed the following information about its inventories in applying the lower-of-cost-or-net-realizabl e-value(LCNRV) basis in valuing inventories: Product Cost NRV A $114,000 $120,000 B 80,000 76,000 C 160,000 162,000 After Jenks applies the LCNRV rule, the value of the inventory reported on the balance sheet would be
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Smith Company's inventory cost is $100. The expected sales price is $110, estimated selling costs are $6. The normal gross profit ratio is 20% of selling price. The replacement cost of the inventory is $95. Smith Company uses the LIFO inventory method so must use the lower of cost or market approach and this inventory item should be valued at Correct answer came back as $95, Id love an explanation for this. Thank you!